Tesla Tumbles, Alphabet’s Ad Miss, ‘Cracks’ In the Economy? 7/24/24

Carl Quintanilla (0:00)

Market moving insight and analysis. Join Jim Cramer, David Faber, and me, Carl Quintanilla, on the opening bell hour of CNBC Squawk on the Street.

Rick Santelli (0:08)

Good Wednesday morning.

Carl Quintanilla (0:09)

Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures are red as Alphabet and Tesla earnings lead to some Mag 7 weakness. Meantime, some macro worries getting folded in as well. From Visa, Capital One, LVMH, to your yield is the lowest now since February. Our roadmap begins with some warning signs for Megacap Tech, Tesla and Alphabet failed to impress, dragging down some other Mag 7 names ahead of the open.

David Faber (0:34)

Plus Visa is saying consumer spending remains strong, while JPMorgan sees signs the macroeconomic picture may be quote, cracking and AT&T delivers a beat for wireless phone subscription additions, and the shares are higher at least a half hour before we get started with trading.

Carl Quintanilla (0:53)

Let's get started with Tesla this morning, tumbling in the pre-market on that earnings miss, also reporting the 7% drop in auto revenue on the call last night. Elon Musk did stress the importance of autonomy and optimists going forward.

Elon Musk (1:07)

I really just can't emphasize just the importance of autonomy for the vehicle side and for optimists. Although the numbers sound crazy, I think Tesla producing at volume with unsupervised MSD essentially enabling the fleet to operate like a giant autonomous fleet. And it takes the valuation, I think, to some pretty crazy number. ARK Invest thinks on the order of $5 trillion, I think they're probably not wrong.

And Long Term Optimist, I think, achieves a valuation several times that number. I want to thank the Tesla team for strong execution and looking forward to exciting years.

Carl Quintanilla (2:00)

Our biggest miss in a few years here, Jim, although you spent much of the morning defending the name.

Elon Musk (2:04)

Yeah.

Jim Cramer (2:04)

Look, I think that ever since the stock broke down based on the autos, it's not been as great a story that people want. Now, it's come back pretty quickly and some of that is short covering. But look, if you want to know what's going to happen with fully self-driving autonomous, you want to know what's going to be autonomous, you want to know what's going to happen with robots, you want to know what they're going to do with energy to the grid.

David, you've got everything you wanted on this call. If you wanted to hear about great auto numbers, well, go to GM.

David Faber (2:40)

GM was crushed yesterday in the stock market.

Jim Cramer (2:43)

Adam Jonas killed GM.

David Faber (2:44)

Yeah, even though it had strong numbers.

I have in my time, but Tesla is going to be down. You're right. Listen, I advise anybody who's interested in just the future to talk or to listen to these calls. Now, with a great amount of at least skepticism, perhaps, in some of the targets and some of the numbers that Mr. Musk shares, because he does tend to be a bit overly optimistic. And he said that at one point in the call. And he does. He admits it in terms of when the robotaxi or when full self-driving will be ready. They're now coming out with 12.5. He says that's a huge increase. But he talks about governments acting rationally, almost, saying, well, when the number of accidents by humans is clearly in excess of what full self-driving would be, everybody will just allow full self-driving. That doesn't really seem to work in the real world, though, does it?

Jim Cramer (3:33)

He was saying the federal rules.

David Faber (3:34)

Yeah, well, just change. I may be a bit optimistic.

Jim Cramer (3:38)

I think you're absolutely right, David. I mean, look, this was a quarter. The stock is down much more than it was when the company reported, but this is a quarter where the conference call just said to me, all right, look, we'll do well with auto, but you've got to start thinking bigger than auto.

David Faber (3:50)

Well, he's been saying that for some time, as you won't know.

No, they didn't. Right. And the margins, obviously, are what our people are focused on, and they did not come in where there was a hope for. We all know about the price cutting that's taking place, the increased competition, the perhaps decreased demand, at least. And for example, his former home state of California, which is a huge market for EVs. You have to wonder whether his political tilt is impacting in some way. Sometimes I do wonder on the sales front. But so many other parts of the business. Musk, once again reiterating, if you're interested in building cars, don't buy this stock. We're about full autonomy. We're about robots. And we're about storage, energy storage.